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  • Ten things you should know about the amendments to Quebec’s Charter of the French language

    Quebec recently enacted Bill 96, entitled An Act respecting French, the official and common language of Québec, which aims to overhaul the Charter of the French language. Here are 10 key changes in this law that will impose significant obligations on businesses: As of June 1, 2025, businesses employing more than 25 people (currently the threshold is 50 people) for at least six months will be required to comply with various “francization”1 obligations. Businesses with between 25 and 99 employees may also be ordered by the Office québécois de la langue française (the OQLF)2 to form a francization committee. In addition, at the request of the OQLF, businesses may have to provide a francization program for review within three months. As of June 1, 2025, only trademarks registered in a language other than French (and for which no French version has been filed or registered) will be accepted as an exception to the general principle that trademarks must be translated into French. Unregistered trademarks that are not in French must be accompanied by their French equivalent. The rule is the same for products as well as their labelling and packaging; any writing must be in French. The French text may be accompanied by a translation or translations, but no text in another language may be given greater prominence than the text in French or be made available on more favourable terms. However, as of June 1, 2025, generic or descriptive terms included in a trademark registered in a language other than French (for which no French version has been registered) must be translated into French. In addition, as of June 1, 2025, on public signs and posters visible from outside the premises, (i) French must be markedly predominant (rather than being sufficiently present) and (ii) the display of trademarks that are not in French (for which no French version has been registered) will be limited to registered trademarks. As of June 1, 2022, businesses that offer goods or services to consumers must respect their right to be informed and served in French. In the event of breaches of this obligation, consumers have the right to file a complaint with the OQLF or to request an injunction unless the business has fewer than five employees. In addition, any legal person or company that provides services to the civil administration3 will be required to provide these services in French, including when the services are intended for the public. As of June 1, 2022, subject to certain criteria provided for in the bill, employers are required to draw up the following written documents in French: individual employment contracts4 and communications addressed to a worker or to an association of workers, including communications following the end of the employment relationship with an employee. In addition, other documents such as job application forms, documents relating to working conditions and training documents must be made available in French.5 As of June 1, 2022, employers who wish to require employees to have a certain level of proficiency in a language other than French in order to obtain a position must demonstrate that this requirement is necessary for the performance of the duties related to the position, that it is impossible to proceed using internal resources and that they have made efforts to limit the number of positions in their company requiring knowledge of a language other than French as much as possible. As of June 1, 2023, parties wishing to enter into a consumer contract in a language other than French, or, subject to various exceptions,6 a contract of adhesion that is not a consumer contract, must have received a French version of the contract before agreeing to it. Otherwise, a party can demand that the contract be cancelled without it being necessary to prove harm. As of June 1, 2023, the civil administration will be prohibited from entering into a contract with or granting a subsidy to a business that employs 25 or more people and that does not comply with the following obligations on the use of the French language: obtaining a certificate of registration, sending the OQLF an analysis of the language situation in the business within the time prescribed, or obtaining an attestation of implementation of a francization program or a francization certificate, depending on the case. As of June 1, 2023, all contracts and agreements entered into by the civil administration, as well as all written documents sent to an agency of the civil administration by a legal person or by a business to obtain a permit, an authorization or a subsidy or other form of financial assistance must be drawn up exclusively in French. As of September 1, 2022, a certified French translation must be attached to motions and other pleadings drawn up in English that emanate from a business or legal person that is a party to a pleading in Quebec. The legal person will bear the translation costs. The application of the provisions imposing this obligation has, however, been suspended for the time being by the Superior Court.7 As of September 1, 2022, registrations in the Register of Personal and Movable Real Rights and in the Land Registry Office, in particular registrations of securities, deeds of sale, leases and various other rights, must be made in French. Note that declarations of co-ownership must be filed at the Land Registry Office in French as of June 1, 2022. The lawyers at Lavery know Quebec’s language laws and can help you understand the impact of Bill 96 on your business, as well as inform you of the steps to take to meet these new obligations. Please do not hesitate to contact one of the Lavery team members named in this article for assistance. “Francization” refers to a process established by the Charter of the French language to ensure the generalized use of French in businesses. The OQLF is the regulatory body responsible for enforcing the Charter of the French language. The civil administration in this law includes any public body in the broad sense of the term. An employee who signed an individual employment contract before June 1, 2022, will have until June 1, 2023, to ask their employer to provide them with a French translation if the employee so wishes. If the individual employment contract is a fixed-term employment contract that ends before June 1, 2024, the employer is not obliged to have it translated into French at the request of the employee. Employers have until June 1, 2023, to have job application forms, documents related to work conditions and training documents translated into French if these are not already available to employees in French. Among these exceptions are employment contracts, loan contracts and contracts used in “relations with persons outside Quebec.” There seems to be a contradiction in the law with regard to individual employment contracts which are contracts of adhesion and for which the obligation to provide a French translation nevertheless seems to apply. Mitchell c. Procureur général du Québec, 2022 QCCS 2983.

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  • Bill C-18 (Online News Act): Canada looking to create a level playing field for news media

    Earlier this month, Canadian Heritage Minister Pablo Rodriguez introduced Bill C-18 (Online News Act) in Parliament. This bill, which was largely inspired by similar legislation in Australia, aims to reduce bargaining imbalances between online platforms and Canadian news outlets in terms of how these “digital news intermediaries” allow news content to be accessed and shared on their platforms. If passed, the Online News Act would, among other things, require these digital platforms such as Google and Facebook to enter into fair commercial agreements with news organizations for the use and dissemination of news related content on their platforms. Bill C-18, which was introduced on April 5, 2022, has a very broad scope, and covers all Canadian journalistic organizations, regardless of the type of media (online, print, etc.), if they meet certain eligibility criteria. With respect to the “digital news intermediaries” on which the journalistic content is shared, Bill C-18 specifically targets online communication platforms such as search engines or social media networks through which news content is made available to Canadian users and which, due to their size, have a significant bargaining imbalance with news media organizations. The bill proposes certain criteria by which this situation of bargaining imbalance can be determined, including the size of the digital platform, whether the platform operates in a market that provides a strategic advantage over news organizations and whether the platform occupies a prominent position within its market. These are clearly very subjective criteria which make it difficult to precisely identify these “digital news intermediaries.” Bill C-18 also currently provides that the intermediaries themselves will be required to notify the Canadian Radio-television and Telecommunications Commission (“CRTC”) of the fact that the Act applies to them. The mandatory negotiation process is really the heart of Bill C-18. If passed in its current form, digital platform operators will be required to negotiate in good faith with Canadian media organizations to reach fair revenue sharing agreements. If the parties fail to reach an agreement at the end of the negotiation and mediation process provided for in the legislation, a panel of three arbitrators may be called upon to select the final offer made by one of the parties. For the purposes of enforceability, the arbitration panel’s decision is then deemed, to constitute an agreement entered into by the parties. Finally, Bill C-18 provides digital platforms the possibility of applying to the CRTC for an exemption from mandatory arbitration provided that their revenue sharing agreements meet the following criteria: Provide fair compensation to the news businesses for news content that is made available on their platforms; Ensure that an appropriate portion of the compensation would be used by the news businesses to support the production of local, regional and national news content; Do not allow corporate influence to undermine the freedom of expression and journalistic independence enjoyed by news outlets; Contribute to the sustainability of Canada’s digital news marketplace; Ensure support for independent local news businesses, and ensure that a significant portion of independent local news businesses benefit from the deals; and Reflect the diversity of the Canadian news marketplace, including diversity with respect to language, racialized groups, Indigenous communities, local news and business models. A bill of this scope will certainly be studied very closely by the members of Parliament, and it would not be surprising if significant amendments were made during this process. We believe that some clarifications would be welcome, particularly as to the precise identity of businesses that will be considered “digital information intermediaries” for the purposes of the Online News Act.

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  • A False Sense of Cybersecurity?

    Ransomware has wreaked so much havoc in recent years that many people forget about other cybersecurity risks. For some, not storing personal information makes them feeling immune to hackers and cyber incidents. For others, as long as their computers are working, they do not feel exposed to no malware. Unfortunately, the reality is quite different. A new trend is emerging: malware is being released to collect confidential information, including trade secrets, and then such information is being sold to third parties or released to the public.1 The Pegasus software used to spy on journalists and political opponents around the world has been widely discussed in the media, to the point that U.S. authorities decided to include it on their trade blacklist.2 However, the use of spyware is not limited to the political sphere. Recently, a California court ordered a U.S. corporation, 24[7].ai, to pay $30 million to one of its competitors, Liveperson.3 This is because 24[7].ai installed competing technology on mutual client websites where LivePerson’s technology already is installed. Liveperson alleged in its lawsuit that 24[7].ai installed spyware that gathered confidential and proprietary information and data regarding Liveperson’s technology and client relationships. In addition, the software which 24[7].ai allegedly installed removed some features of Liveperson’s technology, including the “chat” button. In doing so, 24[7].ai interfered in the relationship between Liveperson and its clients. This legal saga is ongoing, as another trial is scheduled to take place regarding trade secrets related to a Liveperson client.4 This legal dispute illustrates that cybersecurity is not only about personal information, but also about trade secrets and even the proper functioning of business software. A number of precautions can be taken to reduce the risk of cybersecurity incidents. Robust internal policies at all levels of the business help maintain a safe framework for business operations. Combined with employee awareness of the legal and business issues surrounding cybersecurity, these policies can be important additions to IT best practices. In addition, employee awareness facilitates the adoption of best practices, including systematic investigations of performance anomalies and the use of programming methods that protect trade secrets. Moreover, it may be advisable to ensure that contracts with clients provide IT suppliers with sufficient access to conduct  the necessary monitoring for the security of both parties. Ultimately, it is important to remember that the board of directors must exercise its duty with care, diligence and skill while looking out for the best interests of the business. Directors could be held personally liable if they fail to meet their obligation to ensure that adequate measures are implemented to prevent cyber incidents or if they ignore the risks and are wilfully blind. Thus, board members must be vigilant, be trained in and aware of cybersecurity in order to integrate it into their risk management approach. In an era in which intellectual property has become a corporation’s most important asset, it goes without saying that it is essential to put in place not only the technological tools, but also the procedures and policies required to adequately protect it! Contact Lavery for advice on the legal aspects of cybersecurity. See Page, Carly, “This new Android spyware masquerades as legitimate apps,” Techcrunch, November 10, 2021. https://techcrunch.com/2021/11/10/android-spyware-legitimate-apps; Page, Carly, “FBI says ransomware groups are using private financial information to further extort victims,” Techcrunch, November 2, 2021. https://techcrunch.com/2021/11/02/fbi-ransomware-private-financial-extort. Gardner, Frank, “NSO Group: Israeli spyware company added to US trade blacklist,” BBC News, November 3, 2021. https://www.bbc.com/news/technology-59149651. Claburn, Thomas, “Spyware, trade-secret theft, and $30m in damages: How two online support partners spectacularly fell out,” The Register,June 18, 2021. https://www.theregister.com/2021/06/18/liveperson_wins_30m_trade_secret. Brittain, Blake, “LivePerson wins $30 million from [24]7.ai in trade-secret verdict,”Reuters, June 17, 2021. https://www.reuters.com/legal/transactional/liveperson-wins-30-million-247ai-trade-secret-verdict-2021-06-17.

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  • Adoption of Bill 64: what do public bodies need to know?

    Bill 64, also known as the Act to modernize legislative provisions as regards the protection of personal information, was adopted on September 21, 2021, by the National Assembly of Québec. This new bill amends some 20 laws relating to the protection of personal information, including the Act respecting Access to documents held by public bodies and the Protection of personal information ("Access Act"), the Act respecting the protection of personal information in the private sector (“ARPIPS”) and the Act to establish a legal framework for information technology (“AELFIT”). While these changes will affect both public bodies and private businesses, this article focuses exclusively on the new requirements for public bodies covered by the Access Act.  We have prepared an amended version of the Access Act in order to reflect the exact changes brought about by Bill 64. 1. Strengthening consent mechanisms and increasing individual control over personal information By way of Bill 64, some important changes were made to the notion of consent when disclosing personal information to public bodies. From now on, any time an individual’s consent is required by the Access Act, public bodies must ensure that the concerned individual’s consent is given separately from any other disclosed information (s. 53.1). Furthermore, any consent to the collection of sensitive personal information (e.g., health or financial information that gives rise to a reasonable expectation of privacy) will have to be expressly obtained from the data subject (s. 59). The amended Access Act now also provides that minors under the age of 14 must have a parent or a guardian consent to the collection of their personal information. For minors over the age of 14, consent can be given either directly by the minor or by their parent or guardian (s. 53.1). The right to data portability is one of the new rights enforced by Bill 64. These added provisions to the Access Act allow data subjects to obtain data that a public body holds on them in a structured and commonly used technological format and to demand that this data be released to a third party (s. 84). Whenever a public body renders a decision based exclusively on automated processing of personal information, the affected individual must be informed of this process. If the decision produces legal effects or otherwise affects the individual concerned, upon request, the public body must also disclose to the individual (i) the personal information used in reaching the decision, (ii) the reasons and main factors leading to the decision, and (iii) the individual’s right to have this personal information rectified (s. 65.2).  Furthermore, public bodies that use technology to identify, locate or profile an individual must now inform the affected individual of the use of such technology and the means that are available to them in order to disable such functions (s. 65.0.1). 2. New personal data protection mechanisms Public bodies will now be required to conduct a privacy impact assessment whenever they seek to implement or update any information system that involves the collection, use, disclosure, retention or destruction of personal data (s. 63.5). This obligation will effectively compel public bodies to consider the privacy and personal information protection risks involved in a certain project at its outset. In fact, the Access Act now states that every public body must create an access to information committee, whose responsibilities will include offering their observations in such circumstances. 3. Promoting transparency and accountability for public bodies The changes brought about by Bill 64 also aim to increase the transparency of processes employed by public bodies in collecting and using personal data, as well as placing an emphasis on accountability. As such, public bodies will now have to publish on their websites the rules that govern their handling of personal data in clear and simple language (s. 63.3). These rules may take the form of a policy, directive or guide and must set out the various responsibilities of staff members with respect to personal information. Training and awareness programs for staff should also be listed. Any public body that collects personal information through technological means will likewise be required to publish a privacy policy on their website. The policy will have to be drafted in clear and simple language (s. 63.4). The government may eventually adopt regulations to specify the required content of such privacy policies. Moving forward, public bodies will also have to inform data subjects of any personal data transfer outside of the province of Quebec (s. 65). Any such transfer will also need to undergo a privacy impact assessment, which will include an analysis of the legal framework applicable in the State where the personal information will be transferred (s. 70.1). Furthermore, any transfer of personal data outside of Quebec must be subject to a written agreement that takes into account, in particular, the results of the privacy impact assessment and, if applicable, the agreed-upon terms to mitigate the risks identified in the assessment (s. 70.1). A public body that wishes to entrust a person or body outside of Quebec with the task of collecting, using, communicating or retaining personal information on its behalf will have to undertake a similar exercise (s. 70.1 (3)). 4. Managing confidentiality incidents Where a public body has reason to believe that a confidentiality incident (which is defined in Bill 64 as the access, use, disclosure or loss of personal information) has occurred, public bodies will be required to take reasonable steps to mitigate the injury caused to the affected individuals and to reduce the risk of further confidentiality incidents occurring in the future (s. 63.7). In addition, where the confidentiality incident poses a risk of serious harm to the affected individuals, these individuals and the Commission d’accès à l’information (“CAI”) must be notified (unless doing so would interfere with an investigation to prevent, detect or suppress crime or violations of law) (s. 63.7). Public bodies must now also keep a register of confidentiality incidents (s. 63.10), a copy of which must be sent to the CAI upon request. 5. Increased powers for the CAI Bill 64 also grants the CAI an arsenal of new powers aiming to ensure that public bodies, as well as private companies, comply with privacy laws. For example, in the event of a confidentiality incident, the CAI may order any public body to take appropriate action to protect the rights of affected individuals, after allowing the public body to make representations (s. 127.2). Furthermore, the CAI now has the power to impose substantial administrative monetary penalties, the value of which may reach up to $150,000 for public bodies (s. 159). In the event of repeat offences, fines will be doubled (s. 164.1). 6. Coming into force The amendments made by Bill 64 will come into force in several stages. Most of the new provisions of the Access Act [DM1] will come into force two years after the date of assent, which was granted on September 22, 2021. However, some specific provisions will take effect one year after that date, including: The requirements regarding actions to be taken in response to confidentiality incidents (s. 63.7) and the powers of the CAI upon disclosure by an organization of a confidentiality incident (s. 137.2); and The exception to disclosure without consent for research purposes (s. 67.2.1). Conclusion The clock is now ticking for public bodies to implement the necessary changes in order to comply with the new privacy requirements outlined in Bill 64, which received official assent on September 22, 2021. We invite you to consult our privacy specialists to help ensure proper compliance with the new requirements of the updated Access Act. The Lavery team would be more than pleased to answer any questions you may have regarding the upcoming changes and the potential impacts on your org

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  • Amendments to Privacy Laws: What Businesses Need to Know

    Bill 64, also known as the Act to modernize legislative provisions respecting the protection of personal information, was adopted on September 21, 2021, by the National Assembly of Québec. It amends some 20 laws relating to the protection of personal information, including the Act respecting access to documents held by public bodies ("Access Act"), the Act respecting the protection of personal information in the private sector ("Private Sector Act") and the Act respecting the legal framework for information technology. While the changes will affect both public bodies and private businesses, this publication will focus on providing an overview of the new requirements for private businesses covered by the Private Sector Act. We have prepared an amended version of the Private Sector Act in order to reflect the exact changes brought about by Bill 64. Essentially, the amended Private Sector Act aims to give individuals greater control over their personal information and promote the protection of personal information by making businesses more accountable and introducing new mechanisms to ensure compliance with Québec’s privacy rules. The following is a summary of the main amendments adopted by the legislator and the new requirements imposed on businesses in this area. It is important to note that, for the most part, the new privacy regime will come into effect in two years. 1. Increasing transparency and individual control over personal information The new Private Sector Act establishes the right of individuals to access information about themselves collected by businesses in a structured and commonly used technological format. Data subjects will now also be able to require a business to disclose such information to a third party, as long as the information was not “created or inferred” by the business (s. 27). This right is commonly referred to as the “right to data portability.” Businesses now have an obligation to destroy personal information once the purposes for which it was collected or used have been fulfilled. Alternatively, businesses may anonymize personal information in accordance with generally accepted best practices in order to use it for meaningful and legitimate purposes (s. 23). However, it is important that the identity of concerned individuals can never again be inferred from the retained information. This is a significant change for private businesses which, under the current law, can still retain personal information that has lapsed. In addition, Bill 64 provides individuals with a right to “de-indexation.” In other words, businesses will now have to de-index any hyperlink that leads to an individual’s personal information where dissemination of such personal information goes against the law or a court order (s. 28.1). Additionally, whenever a business uses personal information to render a decision based exclusively on an automated processing of such information, it must inform the concerned individual of the process at the latest when the decision is made (s. 12.1). The individual must likewise be made aware of their right to have the information rectified (s. 12.1). Bill 64 provides that the release and use of nominative lists by a private company for commercial or philanthropic prospecting purposes are now subject to the consent of concerned data subjects. Furthermore, in an effort to increase transparency, businesses will now be required to publish their rules of governance with respect to personal information in simple and clear terms on their website (s. 3.2). These rules may take the form of a policy, directive or guide and must, among other things, set out the various responsibilities of staff members with respect to personal information. In addition, businesses that collect personal information through technology will also be required to adopt and publish a privacy policy in plain language on their website when they collect personal information (s. 8.2). The amended Private Sector Act further provides that businesses that refuse access to information requests, in addition to giving reasons for their refusal and indicating the relevant sections of the Act, must now assist applicants in understanding why their request was denied when asked to (s. 34). 2. Promoting privacy and corporate accountability Bill 64 aims to make businesses more accountable for the protection of personal information, as exemplified by the new requirement for businesses to appoint a Chief Privacy Officer within their organization. By default, the role will fall upon the most senior person in the organization (s. 3.1). In addition, businesses will be required to conduct privacy impact assessments (“PIA”) for any information system acquisition, development or redesign project involving the collection, use, disclosure, retention or destruction of personal information (s. 3.3). This obligation forces businesses to consider the privacy and personal information protection risks involved in a project at its outset. The PIA must be proportionate to the sensitivity of the information involved, the purpose for which it is to be used, its quantity, distribution and medium (s. 3.3). Businesses will likewise be required to conduct a PIA when they intend to disclose personal information outside Québec. In these cases, the purpose of the PIA will be to determine whether the information will be adequately protected in accordance with generally accepted privacy principles (s. 17). The extra-provincial release of personal information must also be subject to a written agreement that takes into account, among other things, the results of the PIA and, if applicable, the terms and conditions agreed to in order to mitigate identified risks (s. 17(2)). The disclosure of personal information by businesses for study, research or statistical purposes is also subject to a PIA (s. 21). The law is substantially modified in this regard, in that a third party wishing to use personal information for such purposes must submit a written request to the Commission d'accès à l'information (“CAI”), attach a detailed description of their research activities and disclose a list of all persons and organizations to which it has made similar requests (s. 21.01.1 and 21.01.02). Businesses may also disclose personal information to a third party, without the consent of the individual, in the course of performing a service or for the purposes of a business contract. The mandate must be set out in a written contract, which must include the privacy safeguards to be followed by the agent or service provider (s. 18.3). The release of personal information without the consent of concerned individuals as part of a commercial transaction between private companies is subject to certain specific requirements (s. 18.4). The amended Private Sector Act now defines a business transaction as “the sale or lease of all or part of an enterprise or its assets, a change in its legal structure by merger or otherwise, the obtaining of a loan or other form of financing by it, or the taking of a security interest to secure an obligation of the enterprise” (s. 18.4). Bill 64 enshrines the concept of “privacy by default,” which means that businesses that collect personal information by offering a technological product or service to the public with various privacy settings must ensure that these settings provide the highest level of privacy by default, without any intervention on behalf of their users (s. 9.1). This does not apply to cookies. Where a business has reason to believe that a privacy incident has occurred, it must take reasonable steps to reduce the risk of harm and the reoccurrence of similar incidents (s. 3.5). A privacy incident is defined as “the access, use, disclosure or loss of personal information” (s. 3.6). In addition, businesses are required to notify concerned individuals and the CAI for each incident that presents a serious risk of harm, which is assessed in light of the sensitivity of the concerned information, the apprehended consequences of its use and the likelihood that it will be used for a harmful purpose (s. 3.7). Companies will furthermore be required to keep a confidentiality incident log that must be made available to the CAI upon request (s. 3.8). 3. Strengthening the consent regime Bill 64 modifies the Private Sector Act to ensure that any consent provided for in the Act is clear, free and informed and given for specific purposes. This means that consent must be requested for each of the purposes of the collection, in simple and clear terms and in a clearly distinct manner, to avoid consent being obtained through complex terms of use that are difficult for individuals to understand (art. 14). The amended Private Sector Act now provides that minors under the age of 14 must have a parent or a guardian consent to the collection of their personal information. For minors over the age of 14, consent can be given either directly by the minor or by their parent or guardian (s. 14). Within an organization, consent to the disclosure of sensitive personal information (e.g., health or other intimate information) must be expressly given by individuals (s. 12). 4. Ensuring better compliance The Private Sector Act has likewise been amended by adding new mechanisms to ensure that businesses subject to the Private Sector Act comply with its requirements. Firstly, the CAI is given the power to impose hefty dissuasive administrative monetary penalties on offenders, which can be as high as $10,000,000 or 2% of the company's worldwide turnover (s. 90.12). In the event of a repeat offence, the fine will be doubled (s. 92.1). In addition, when a confidentiality incident occurs within a company, the CAI may order it to take measures to protect the rights of affected individuals, after allowing the company to make observations (s. 81.3). Secondly, new criminal offences are added to the Private Sector Act, which may also lead to the imposition of severe fines. For offending companies, such fines can reach up to $25,000,000 or 4% of their worldwide turnover (s. 91). Finally, Bill 64 creates a new private right of action. Essentially, it provides that when an unlawful infringement of a right conferred by the Private Sector Act or by articles 35 to 40 of the Civil Code of Québec results in prejudice and the infringement is intentional or the result of gross negligence, the courts may award punitive damages of at least $1,000 (s. 93.1). 5. Coming into force The amendments made by Bill 64 will come into force in several stages. Most of the new provisions of the Private Sector Act will come into force two years after the date of assent, which was granted on September 22, 2021. However, some specific provisions will take effect one year after that date, including: The requirement for businesses to designate a Chief Privacy Officer (s. 3.1); The obligation to report privacy incidents (s. 3.5 to 3.8); The exception for disclosure of personal information in the course of a commercial transaction (s. 18.4); and The exception to disclosure of personal information for study or research purposes (s. 21 to 21.0.2). Finally, the provision enshrining the right to portability of personal information (s. 27) will come into force three years after the date of official assent. The Lavery team would be more than pleased to answer any questions you may have regarding the upcoming changes and the potential impact of Bill 64 on your business. The information and comments contained in this document do not constitute legal advice. They are intended solely for the use of the reader, who assumes full responsibility for its content, for their own purposes.

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  • What are the Duties and Responsibilities of Corporate Directors during the COVID-19 Crisis?

    This publication was written in collaboration with André Laurin. By all accounts, the coronavirus pandemic and the measures implemented by the government have created a particularly difficult and delicate situation for almost all organizations. Despite this extraordinary situation, the general duties of directors (duty to comply with the law, duty of care and duty of loyalty or fiduciary duty) as required by the relevant laws of incorporation and by the Civil Code of Québec remain the same. However, in the current context, the directors of a legal person must greatly improve and intensify their thinking process and their actions, in order to ensure that they respect these duties and, in particular, to ensure that they act in the best interests of the legal person in question. According to the incorporation laws and the Civil Code of Québec, the board of directors is responsible for the management of the legal person or, as the case may be, for the supervision of the management performed by the persons to whom they have delegated their powers, namely the legal person’s management team. Duty of care For directors of legal persons, respecting their duty of care involves, now more than ever: an understanding of the challenges and risks associated with the impact of COVID-19 on the legal person’s business, clients, employees, suppliers, etc.; identifying the best management measures available, relying upon what they reasonably consider as being the best practices under the circumstances; attentively monitoring the implementation of the decisions made and making the appropriate adjustments as things evolve. On this subject, please note that the business corporations acts specify that directors are considered to have complied with their duty of care if their decisions rely in good faith on the reports of a person whose profession lends credibility to his statements. Duty of loyalty As well as a duty of care, the law also imposes a duty of loyalty, also referred to as a fiduciary duty, on directors of legal persons, which, among other things, requires them to act in the best interests of the legal person. The Supreme Court of Canada provided interpretations of the duty of loyalty in its 2008 BCE decision1 (many of these interpretations have been explicitly integrated into recent modifications to the Canada Business Corporations Act2): characterizing the interests of the legal person as being those of a responsible corporate citizen (or “good corporate citizen”); highlighting that directors pursuant to this duty of loyalty may consider the interests of the stakeholders, such as shareholders, employees, retired persons, creditors, consumers, governments and the environment, who may be affected by their decisions; specifying, however, that if the interests of the various stakeholders cannot be reconciled with the best interests of the legal person, the long-term best interests of such legal person viewed as an ongoing concern must prevail. In practice, in order to respect this duty, directors cannot disobey the law. They must also, in particular: ensure that the legal person takes necessary measures to respect the directives of public authorities; ensure that the legal person takes appropriate measures to protect the health of its employees, clients and suppliers; not tolerate practices that are generally detrimental to the legal person or that aim to fraudulently profit from the current crisis; prioritize measures that have the best chance of enabling a substantial part of the legal person’s business to survive and restart the majority of its operations once the situation returns to normal3. We believe that in the current circumstances, it would be consistent with best practices for directors to consider the interests of stakeholders. This involves identifying those interests and evaluating them reasonably and fairly, as well as evaluating whether they can be reconciled with the legal person’s best interests. It is clear that the current situation does not easily allow for reconciling, at least in the short term, the interests of all of stakeholders with the interests the legal person, which must prevail. Maintaining the conditions and relationships that existed before the crisis will be, in most cases, difficult to reconcile with the long-term best interests of the legal person, as defined and interpreted by the law and the courts. Directors therefore must arbitrate between these interests in a reasonable way, prioritizing the interests of the legal person, even if it is difficult to do so. This crisis, the government directives and their effects require leadership and creativity on the part of directors. As has been written by several observers, the current crisis will necessitate new approaches when the pandemic is over. In this endeavour, directors must be proactive and must help management find solutions to limit the negative effects of the crisis and plan on potential new ways for the carrying out of the legal person’s operations in the coming years.   BCE Inc. v. 1976 Debentureholders, [2008] 3 S.C.R. 560, 2008 SCC 69. See subsection 122 (1.1) of the Canada Business Corporations Act, RSC 1985, c C-44. A very apropos article on the way directors can fulfill their duties of diligence and loyalty was posted on the Harvard Law School Forum on Corporate Governance on March 29, 2020: GREGORY, Holly J., GRAPSAS, Rebecca and HOLLAND, Claire, Ten Considerations for Boards of Directors, Cambridge, Harvard Law School Forum on Corporate Governance, online: https://corpgov.law.harvard.edu/2020/03/29/ten-considerations-for-boards-of-directors/.

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  • Bill 162: An Act to amend the Building Act and other legislative provisions mainly to give effect to certain Charbonneau Commission recommendations

    Tabled on December 1, 2017 by Lise Thériault, the Minister responsible for Consumer Protection and Housing, the main purpose of Bill 162 is to give effect to certain recommendations contained in the final report of the Commission of inquiry on the awarding and management of public contracts in the construction industry. Amendments to the Building Act Firstly, the Bill amends the definition of "officer" contained in the Building Act so as to include any shareholder of a partnership or corporation holding 10% or more of the voting rights attached to its shares, particularly for purposes of the assessment by the Régie du bâtiment du Québec (the "Board") of an undertaking’s integrity. The notion of "guarantor" is added to the Building Act to describe a natural person who, by applying for a licence on behalf of a partnership or legal person, or by holding such a licence himself or herself, becomes responsible for managing the activities for which the licence is being issued. In addition, the Board's powers of inquiry, verification and inspection are expanded. Finally, the Act provides for immunity from civil proceedings and protection from reprisals for any person who communicates information in good faith to the Board regarding any act or omission which he or she believes constitutes a violation or offence under the Building Act. Certain penal provisions have also been added for the purpose of sanctioning any person who takes reprisals in response to the disclosure of such information, or who submits false or misleading information to the Board. Additions to the Building Act Secondly, a conviction for certain offences, which already previously warranted restricted access to public contracts, will now lead to a refusal by the Board to issue a licence, and may result in the cancellation or suspension of an existing licence. Furthermore, where such a conviction leads to a person's imprisonment pursuant to a sentence, a licence can only be issued to the person once five years have passed following the end of the said term of imprisonment. The Board will be required to cancel a licence where the licence holder, or any officer of an undertaking holding a licence, is convicted of an offence or any indictable offence referred to in the Building Act, where the said person was already convicted of such an offence or indictable offence within the five preceding years. The Board is given new grounds pertaining to the integrity of undertakings to refuse to issue, suspend or cancel a licence, particularly where the corporate structure of the entity enables it to evade the application of the Building Act. In this regard, the Board is obliged, by regulation, to require any contractor to provide either a performance bond or security for wages, materials and services for the purpose of ensuring construction work continues, or the payment of creditors, in the event of the cancellation or suspension (in certain cases) of a licence. Lastly, a new penal offence for the use of "prête-noms" (nominees) is being added, and the prescription period in penal matters is being extended from one year to three years from the date on which the prosecutor had knowledge of the offence, without however exceeding seven years from the date of commission of the offence. Conclusion This Bill, which notably implements four recommendations of the Charbonneau Commission, will be worth watching when parliamentary proceedings resume in the National Assembly on February 6, 2018.

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  • The Supreme Court clarifies the circumstances in which the director
    of a corporation can be held personally liable for oppression

    While the Canada Business Corporations Act, R.S.C. 1985, c. C-44 (“CBCA”) is silent on the circumstances that will result in a director’s personal liability for oppression, and the Canadian courts have failed to agree on the application of the principles considered in the case law in this regard, in the recent decision in Wilson v. Alharayeri 1 (hereinafter “Wilson”), the Supreme Court has now clarified the essential criteria that apply. Background This case originated in 2007 at a time when Wi2Wi Corporation, a technology company incorporated under the CBCA, was facing recurring cash flow issues. Prior to the events that led to the dispute, Mr. Alharayeri held 2 million common shares of the Corporation and was the sole holder of class A preferred shares (1 million) and class B preferred shares (1.5 million) (hereinafter the “A shares” and “B shares” respectively). The A shares were convertible into common shares if the Corporation met certain financial targets in the 2006 fiscal year, while the conversion of the B shares was also subject to certain targets to be met in the 2007 fiscal year. On the other hand, Mr. Wilson, the President, CEO and member of the audit committee of Wi2Wi, beneficially owned or controlled 100,000 class C preferred shares (“C shares”) through another company. The C shares were also convertible into common shares if the Corporation achieved a financial target, set out in its articles of incorporation. In order to resolve the Corporation’s persistent financial difficulties, Wi2Wi’s board of directors decided to offer a private placement of convertible secured notes to its common shareholders (the “Private Placement”), giving each shareholder the right to subscribe for $1 in notes for every two common shares the shareholder held in the Corporation. The notes were convertible into common shares at the rate of 50,000 common shares per principal amount of $1,000 in notes. This Private Placement enabled Mr. Wilson, provided that he first converted his 100,000 C shares into common shares, to subscribe for 50,000 notes of $1, for a value of $50,000 in notes. He would then be able to convert every $1,000 tranche of this $50,000 in notes into 50,000 common shares, giving him a total of 2,500,000 common shares. Thus, the Private Placement would have the effect of considerably reducing the proportion of common shares held by Mr. Alharayeri, if he did not participate in this transaction. Before implementing the Private Placement, the board of directors decided to “accelerate” the conversion into common shares of the 100,000 class C shares beneficially owned by Mr. Wilson through another corporation. This so-called “accelerated” conversion was completed despite the doubts expressed by the auditors as to whether the test for the conversion of these shares had been met. The other C shareholders did not benefit from this conversion. Furthermore, despite the fact that the audited financial statements for 2006 contained a note stating that, based on the financial test laid out in the articles of incorporation, the A shares, held by Mr. Alharayeri, could, at the holder’s option, be converted into 1 million common shares, and despite the fact that he had made requests at meetings of the board of directors and by email for those shares to be converted, this was never done. Similarly, Mr. Alharayeri’s B shares were also not converted, notwithstanding that, based on the approved 2007 financial statements, they could be converted into 223,227 common shares. Mr. Wilson and the audit committee justified the failure to convert Mr. Alharayeri’s shares by pointing to the fact that he had placed himself in a conflict of interest in the past when he was previously the president of Wi2Wi. Dispute As a result of this failure, the value of Mr. Alharayeri’s A and B shares — convertible as they were into common shares — greatly decreased. Faced with what he alleged to be oppressive conduct by the Corporation, Mr. Alharayeri filed an application for oppression in the Superior Court of Québec under s. 241(3) of the CBCA against some of the corporation’s directors, including Mr. Wilson. The issue before the Court was not the right to relief itself, but rather, whether or not Mr. Wilson was personally liable. Indeed, while section 241 CBCA gives the trial judge broad discretionary powers to “make any interim or final order [he or she] thinks fit” against a director personally, it does not specify the circumstances in which a director is justified in being held personally liable under this provision. Applicable principles To date, in the leading decision on the issue of whether or not a director can be held personally liable, rendered by the Ontario Court of Appeal in 1998 in Budd v. Gentra Inc.2, the Court had adopted a two-pronged test. Thus, according to this test, (1) the oppressive conduct must be properly attributable to the director because he or she is implicated in the oppression, and (2) the imposition of personal liability must be fit in all the circumstances. Regarding this second prong of the test, in Wilson, the Supreme Court of Canada states that a minimum of four general principles must be considered for this part of the analysis: The oppression remedy must in itself be a fair way of dealing with the situation. For example, it may be fair to hold a director personally liable where he or she has derived a personal benefit — whether in the form of an immediate financial advantage or increased control of the corporation — breached a personal duty or misused a corporate power, or where a remedy against the corporation would unduly prejudice other security holders; The order rendered should go no further than necessary to rectify the oppression; The order rendered may serve only to vindicate the reasonable expectations of security holders, creditors, directors or officers in their capacity as corporate stakeholders; The court should consider the general corporate law context in exercising its remedial discretion After identifying these principles, the Supreme Court upheld the trial judge’s analysis to the effect that Mr. Wilson should be held personally liable for oppression, and also upheld the conclusion ordering him to pay compensation in the amount of $648,310 to Mr. Alharayeri. On the first prong of the test, the Supreme Court affirmed that Mr. Wilson was implicated in the Corporation’s oppressive conduct, since he played a lead role in the board of director’s discussions resulting in the non-conversion of Mr. Alharayeri’s A and B shares. On the second prong of the test, it noted firstly that the oppression remedy was a fair way of dealing with the situation. Mr. Wilson accrued a personal benefit from the oppressive conduct, namely he increased his control over Wi2Wi through the conversion of his C shares into common shares (while the C shares of others were not converted), which enabled him to participate in the Private Placement, despite the existence of doubts as to whether the test for conversion had been met. This was all done to the detriment of Mr. Alharayeri, whose own interests in the company were diluted due to his inability to participate in the Private Placement. The Court then noted that since the compensation ordered corresponded to the value of the common shares prior to the Private Placement, the remedy went no further than necessary to rectify Mr. Alharayeri’s loss. Finally, the remedy was appropriately fashioned to vindicate Mr. Alharayeri’s reasonable expectations that : 1) his A and B shares would be converted if the Corporation met the applicable financial tests set out in the Corporation’s articles, and 2) the board would take into account his rights in any transaction having an impact on the A and B shares. Conclusion Thus, this decision clarifies the framework for analyzing the personal liability of directors and is a new and important ruling which should be taken into account by any board of directors that is concerned about providing good governance.   2017 SCC 39. 1998 CanLII 5811 (ON CA), 43 B.L.R. (2d) 27 (C.A. Ont.).

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  • Coming into force of the Act to amend various legislation mainly with respect to admission to professions and the governance of the professional system (Bill 98)

    On June 6, 2017, Bill 98, entitled An Act to amend various legislation mainly with respect to admission to professions and the governance of the professional system (the “Act”) was passed by the National Assembly, then assented to by the Lieutenant Governor two days after. This statute, whose main provisions are already in force, modernizes the current professional regime, particularly by amending many provisions of the Professional Code1 (the “Code”). As its title indicates, admission to the professions and the governance of the professional system are among the core elements of this long awaited reform. This bulletin consists in a short and non-exhaustive presentation of the main changes made to the regime. Governance of professional orders Firstly, the Act confers increased powers on the Office des professions du Québec, (the “Office”) whose main function is to see that the various professional orders ensure the protection of the public. Thus, the Office has henceforth the power to require a professional order to take corrective and appropriate follow-up measures and to comply with any other measure determined by the Office, including supervisory or monitoring measures2. Moreover, while it previously had to act upon the Minister’s request or obtain his or her authorization, the Office may henceforth undertake an inquiry on a professional order on its own initiative3. The Office is also required to determine, by regulation and after consultation with the Québec Interprofessional Council, the standards of ethics and professional conduct applicable to directors on a professional order’s board of directors. The regulation adopted by the Office in this respect must, among other things, require the board of directors of the various professional orders to establish, in conformity with the standards determined by the Office, a code of ethics and professional conduct applicable to their members. Through this regulation, the Office must also establish the procedure governing examinations of and inquiries into conduct that may contravene these standards, prescribe appropriate penalties and designate the authorities that are to determine or impose such penalties4. The Act also expands the functions of the board of directors of the various professional orders, whose role is considerably redefined with a focus on sound governance. While the board of directors was previously responsible for the general administration of the order’s affairs, this role is henceforth transferred to the executive director of the order. For its part, the board will ensure the supervision and management of the order5. Furthermore, directors sitting on the board will be required to take training on the role of a professional order’s board of directors as regards such matters as governance and ethics and gender equality as well as training on ethnocultural diversity management6. Some amendments pertaining to the eligibility criteria for directors and the composition of the board are also made for the purpose of ensuring more diversified and adequate representation of the public’s interests7. Disciplinary process and penal offences The powers of the professional orders’ syndics are expanded. The syndic may henceforth, when of the opinion that proceedings instituted against a professional for an offence punishable by a term of imprisonment of five years or more are related to the practice of the profession, request that a disciplinary council immediately impose on the professional either a suspension or provisional restriction of the right to engage in professional activities or to use a title reserved to the members of the order8. In the same vein, a professional must notify the secretary of the professional order which he is a member of that he is the subject of a proceeding for an offence punishable by a term of imprisonment of five years or more9. Furthermore, the syndic has the power to grant immunity to a person who has sent information to him or her to the effect that a professional has committed an offence, when that person is also a party to the offence. Such immunity is valid against any complaint lodged with the disciplinary council in connection with the facts related to the commission of the offence10. The minimum and maximum amounts of the fines that may and sometimes must be imposed by disciplinary councils are increased, from $1,000 to $2,500 and $12,500 to $62,500 respectively11. In certain cases, the disciplinary council may also condemn the respondent who has been found guilty of a breach of ethics to pay a portion of the expenses incurred by the order to conduct an inquiry on the matter12. In the case of a professional found guilty of having engaged in a derogatory act of a sexual nature contrary to section 59.1 of the Code or an act of a similar nature set out in a code of ethics, the disciplinary council will henceforth be required to impose, in addition to a fine, striking off the roll for at least five years unless the respondent convinces the council that striking off for a shorter time would be justified in the circumstances13. Many other amendments pertaining to sexual misconduct are made in the Act14, which shows that the legislator intends to further penalize this type of behaviour in the context of a “tolerance zero” perspective. In penal matters, the Code is amended to distinguish, for the purpose of imposing fines, between natural persons and legal persons or other entities which are neither legal nor natural persons, with a view to imposing harsher punishment on those legal persons or other entities15. Moreover, the Act introduces a new penal offence mainly applicable to employers. Henceforth, every person who takes or threatens to take reprisals against a person on the grounds that that person has sent information to a syndic to the effect that a professional has committed an offence referred to in section 116 or that that person has cooperated in an inquiry is guilty of an offence. For the purposes of the application of this new section of the Code, the demotion, suspension, dismissal or transfer of a person or any other disciplinary or measure that adversely affects that person’s employment or conditions of employment are presumed to be reprisals16. Lastly, the Act modifies the Code to provide, for certain offences, a 3-year prescription period to undertake penal proceedings after the date on which the professional order becomes aware of the commission of the offence, without exceeding seven years from the date the offence was committed17. Admission to professions The position of Commissioner for complaints concerning mechanisms for the recognition of professional competence is replaced with that of Commissioner for Admission to Professions18. The Access to Training Coordination Hub is also established. Its function is to draw up a status report on access to training, identify problems and issues related to training, identify statistical data collection needs, ensure collaboration between the professional orders, educational institutions and departments concerned, and propose solutions to the problems identified19. The Act also amends the Code so that ethics and professional conduct training becomes mandatory for applicants who are seeking admission to a profession, when their study program does not include training respecting these matters20. Conclusion With some exceptions, most of the provision of the Act came into force on the date it was assented to, namely, June 8 last. These provisions reflect a new philosophy for disciplinary standards and the approach of the bodies responsible for enforcing them. This upgrade with the trends in the area of governance was necessary as the mission of protecting the public continues to be ensured in an effective way in the light of the collective awakening for a reflection that is more ethical. Professional Code, CQLR c. C-26. Professional Code, sec. 12. Professional Code, sec. 14. Professional Code, sec. 12.0.1. Professional Code, sec. 62. Professional Code, sec. 62.0.1, para 4. Particularly see sec. 78.1 of the Professional Code. Professional Code, sec. 122.0.1. Professional Code, sec. 59.3. Professional Code, sec. 123.9. Professional Code, sec. 156, al. 1, para c. Professional Code, sec. 151, al. 5. Professional Code, sec. 156, al. 2. Particularly see sec. 160, 2nd paragraph and 161.0.1 of the Professional Code. Professional Code, sec. 188, al. 1. Professional Code, sec. 188.2.2. Professional Code, sec. 189.1 and 189.0.1. Professional Code, sec. 16.9 and seq. Professional Code, sec. 16.24 and seq. Professional Code, sec. 94, para i).

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  • The Role of the Expert under the new Code of Civil Procedure

    The coming into force of the new Code of Civil Procedure on January 1, 2016 created some uncertainty for litigation lawyers. One issue was the role of experts in litigation and in particular the emphasis on joint experts and the filing of an expert’s report in lieu of testimony. Other provisions that appear to deal a blow to professional secrecy and the litigation privilege could also affect litigation lawyers and their clients. The second paragraph of article 235 C.C.P., which covers the expert’s duties, as well as the second paragraph of article 238 C.C.P., which covers testimony taken by an expert, read as follows: “235. Experts are required, on request, to “235. Experts are required, on request, to provide the court and the parties with details on their professional qualifications, the progress of the work and the instructions received from a party; they are also required to comply with the time limits given to them. They may, if necessary to carry out their mission, request directives from the court; such a request is notified to the parties.” “238. Any testimony taken by the expert is attached to the report and forms part of the evidence.” The recent Superior Court decision in SNC-Lavalin inc. v. ArcelorMittal Exploitation minière Canada (2017 QCCS 737) sheds some light on the scope of these provisions and the interpretation given to them by the courts. The judgment The Honourable Jean-François Michaud ruled on objections dealing with professional secrecy and the litigation privilege. SNC-Lavalin Inc. (“SNC”) asked for [Translation] “the experts’ letters of undertaking and the instructions given to them regarding the performance of their mandate”. ArcelorMittal Mining Canada and ArcelorMittal Mines Canada Inc. (“Arcelor”) objected, primarily on the ground of professional secrecy. Arcelor could also have raised the litigation privilege. Before 2016, all solicitor-client communications were confidential and the opposing party did not have access to them. For litigation lawyers, it was their secret garden. Justice Michaud nonetheless dismissed Arcelor’s objection and allowed SNC’s request for two reasons. First, the experts described their mandate in their report, which constitutes a waiver of professional secrecy, at least with respect to that description of their mandate. According to the judge, this reasoning also applies to instructions received later which may have changed the scope of the mandate. The judge was also of the opinion that article 235 C.C.P. reduced the extent of professional secrecy and the litigation privilege, which he found to be reasonable given the expert’s [Translation] “impartial role and the search for the truth”. In obiter, the judge states that article 235 C.C.P. applies even though the experts’ reports were prepared before the new Code of Civil Procedure came into force since that article had immediate effect according to the transitional rules. Lastly, the judge held that Arcelor would be required to provide SNC with any subsequent instructions it gave its experts, although only those relating to the scope of the mandate and excluding any other discussions between the experts and Arcelor or their attorneys. In the second part of its application, SNC requested for the documents consulted by Arcelor’s experts [Translation] “on which they based their opinion”. This essentially covered interviews the experts conducted with some of Arcelor’s employees, which were mentioned in their report. Based on jurisprudence which preceded the reform, the court held that SNC had a right to those interviews if they were recorded and/or transcribed, since the experts’ report referred to them. However, if the experts only took notes of the interviews, those notes were protected by professional secrecy and the litigation privilege and Arcelor was under no obligation to provide them to the other party. Justice Michaud also set aside the application of article 238 C.C.P. which, as mentioned, requires that experts attach any testimony taken to their report. His decision was based on the fact that this provision did not exist when the interviews were conducted and article 238 C.C.P. is not retroactive. Without going into detail about transitional law, which is not the subject of this newsletter, it is difficult to see why this article would be treated differently from article 235 C.C.P. The judge concluded that at some point he will order the experts to meet pursuant to article 240 C.C.P. to “identify the points on which they differ”. Conclusion This judgment and the provisions on which it is based certainly result in a big change for litigation lawyers. They and their clients will likely have to adjust to the new rules. As mentioned above, this new approach runs counter to not only professional secrecy and the litigation privilege, but also the principle that each party is master of his own evidence. However, debates among experts often lead to more disputes than they resolve. In future, lawyers must be scrupulously clear as to the mandates and instructions given to experts.

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  • Artificial Intelligence and the 2017 Canadian Budget: is your business ready?

    The March 22, 2017 Budget of the Government of Canada, through its “Innovation and Skills Plan” (http://www.budget.gc.ca/2017/docs/plan/budget-2017-en.pdf) mentions that Canadian academic and research leadership in artificial intelligence will be translated into a more innovative economy and increased economic growth. The 2017 Budget proposes to provide renewed and enhanced funding of $35 million over five years, beginning in 2017–2018 to the Canadian Institute for Advanced Research (CIFAR) which connects Canadian researchers with collaborative research networks led by eminent Canadian and international researchers on topics including artificial intelligence and deep learning. These measures are in addition to a number of interesting tax measures that support the artificial intelligence sector at both the federal and provincial levels. In Canada and in Québec, the Scientific Research and Experimental Development (SR&ED) Program provides a twofold benefit: SR&ED expenses are deductible from income for tax purposes and a SR&ED investment tax credit (ITC) for SR&ED is available to reduce income tax. In some cases, the remaining ITC can be refunded. In Québec, a refundable tax credit is also available for the development of e-business, where a corporation mainly operates in the field of computer system design or that of software edition and its activities are carried out in an establishment located in Québec. This 2017 Budget aims to improve the competitive and strategic advantage of Canada in the field of artificial intelligence, and, therefore, that of Montréal, a city already enjoying an international reputation in this field. It recognises that artificial intelligence, despite the debates over ethical issues that currently stir up passions within the international community, could help generate strong economic growth, by improving the way in which we produce goods, deliver services and tackle all kinds of social challenges. The Budget also adds that artificial intelligence “opens up possibilities across many sectors, from agriculture to financial services, creating opportunities for companies of all sizes, whether technology start-ups or Canada’s largest financial institutions”. This influence of Canada on the international scene cannot be achieved without government supporting research programs and our universities contributing their expertise. This Budget is therefore a step in the right direction to ensure that all the activities related to artificial intelligence, from R&D to marketing, as well as design and distributions, remain here in Canada. The 2017 budget provides $125 million to launch a Pan-Canadian Artificial Intelligence Strategy for research and talent to promote collaboration between Canada’s main centres of expertise and reinforce Canada’s position as a leading destination for companies seeking to invest in artificial intelligence and innovation. Lavery Legal Lab on Artificial Intelligence (L3AI) We anticipate that within a few years, all companies, businesses and organizations, in every sector and industry, will use some form of artificial intelligence in their day-to-day operations to improve productivity or efficiency, ensure better quality control, conquer new markets and customers, implement new marketing strategies, as well as improve processes, automation and marketing or the profitability of operations. For this reason, Lavery created the Lavery Legal Lab on Artificial Intelligence (L3AI) to analyze and monitor recent and anticipated developments in artificial intelligence from a legal perspective. Our Lab is interested in all projects pertaining to artificial intelligence (AI) and their legal peculiarities, particularly the various branches and applications of artificial intelligence which will rapidly appear in companies and industries. The development of artificial intelligence, through a broad spectrum of branches and applications, will also have an impact on many legal sectors and practices, from intellectual property to protection of personal information, including corporate and business integrity and all fields of business law. In our following publications, the members of our Lavery Legal Lab on Artificial Intelligence (L3AI) will more specifically analyze certain applications of artificial intelligence in various sectors and industries.

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  • Passage of Bill 87: A step towards a more ethical governance of the public sector

    Last December 9, the Lieutenant Governor assented to Bill 87 entitled An Act to facilitate the disclosure of wrongdoings relating to public bodies (the “Act”), whose purpose, as the name indicates, is to facilitate the disclosure of wrongdoing within public bodies, but also to establish a protection regime against reprisals. Moreover, the Québec Ombudsman is given a central role in the protection regime based on his expertise in conducting investigations and because of his independent and impartial status. Counter wrongdoing in the public sector Through the protections it contains, the Act attempts to allay the fears of persons who seek to report harmful situations in the public domain, notably in government departments, school boards, universitylevel educational institutions and budget-funded bodies, but also any act committed by persons appointed or designated by the National Assembly. It also applies to childcare and daycare centers having spaces with subsidized childcare services. The Act not only covers acts committed within public bodies that are harmful to them, but also acts perpetrated by persons in the private sector against public bodies. This being said, it should be noted that it does not apply to the disclosure of wrongdoing made against private companies.1 Thus, any misuse of funds or assets belonging to a public body, any serious breach of the standards of ethics and professional conduct, any abuse of authority, any contravention of the laws of Québec, a federal statute or a regulation, or any inducement of a person to commit a wrongful act, is considered to be “a wrongdoing”. The Act also seeks, through disclosure, to counter any act or omission that would or could seriously compromise the health or safety of a person or the environment. Sanction against reprisals Any person whatsoever may make a disclosure, and at any time, whether this is done anonymously or not. In this regard, the Act gives the Québec Ombudsman broader powers to provide stronger support for whistleblowers. It imposes a mechanism for dealing with disclosures that enables the whistleblower, where their identity is known, to be informed of the various stages for processing the disclosure. The Québec Ombudsman also ensures that the identity of any whistleblower is kept confidential during the subsequent investigation following the disclosure for purposes of protecting that person. Furthermore, any employee, whether in the public or private sector, who has made a disclosure may request the intervention of the Québec Ombudsman or the Commission des normes, de l’équité, de la santé et de la sécurité du travail, if they believe they are the victim of reprisals. Whistleblowers can also take advantage of a service for the provision of legal advice before or after making a disclosure. Finally, any person who takes, or threatens to take, retaliatory action (“a reprisal”) against a whistleblower commits an offence and is liable to a fine of $2,000 to $20,000 in the case of a natural person, and $10,000 to $250,000 in all other cases. Encourage disclosures made in the public interest This statute is the government’s response to certain recommendations of the Charbonneau Commission, and it therefore strengthens measures for preventing and fighting corruption in contractual matters in the public sector, and improves the whistleblower protection regime. Sam Hamad, who was the responsible minister at the time, noted that the purpose of these provisions was not to counter any disclosures made to the media directly, but rather, to give whistleblowers more options. Lastly, while the Act seeks to protect a broad spectrum of public bodies, it does not cover the municipal sector. However, in this regard, the Municipal Ethics and Good Conduct Act provides for a mechanism through which any person having grounds for believing that a member of a municipal council has breached a rule of ethics or conduct, can advise the minister thereof. The Act will come into force on May 1, 2017. In this regard, the parliamentary proceedings concerning the Bill show that there were numerous debates on the issue of whether or not the Bill should apply to the private sector. Ultimately, since there are already several bodies with jurisdiction to protect whistleblowers in the private sector, including UPAC, Revenu Québec, the Autorité des marchés financiers, and the Commission de la construction, the Act was limited to the public sector. We note also that by adopting this statute, Québec is following in the footsteps of the provinces of Alberta, Manitoba, Ontario, Nova Scotia and Newfoundland and Labrador, which have similar statutes applying to the public sector. Only Saskatchewan and New Brunswick offer protection to whistleblowers in the private sector through their respective employment standards legislation.

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  • Implementation of a deferred proceedings program for enterprises: why wait?

    On October 3 2016, Table Justice-Québec, a roundtable organization grouping the main actors of the law and justice community in Quebec, made public its action plan and proposed 22 measures relating to the administration of justice in Quebec. One of the subjects discussed by the participants to this roundtable was that of increasing the use of alternative dispute resolution measures, such as the non-judicial processing of several adult offences and alternative measures for teenagers. Is it not now time for applying similar measures to legal persons through the implementation of a deferred proceedings program for enterprises? The deferred proceedings agreement, already implemented in several countries such as the United States and England, is defined as a negotiation procedure used in the context of penal and administrative proceedings. When a person collaborates with the prosecuting authority, either by acknowledging the facts giving rise to matter, by paying compensation or a fine or performing rehabilitation, the prosecuting attorney abandons the proceedings pending against that person. As early as 1970, this type of diversion, better known in Quebec as alternative measures for minors or diversion program for adults was put to the test in the context of a pilot project. Moreover, since 1995, a diversion program applicable to some criminal offences applies at the DPCP (Direction des poursuites criminelles et pénales) and also municipal courts. This diversion program allows the prosecutor under the authority of the DPCP to deal with the matter on a non-judicial basis (DPCP directive NOJ-1). Hence, various factors are taken into consideration for the application of the diversion program, such as the specific circumstances in which the offence was committed (degree of premeditation, subjective seriousness, particularly as to the consequences of the offence from the victim’s point of view, degree of participation of the alleged perpetrator and the interest of justice, degree of collaboration, risk of recurrence). Sending a warning letter (or a formal notice only used in the case of breach of a probation order containing a repayment condition) is the mean used to apply this program. The application of this diversion measures program directly reduces congestion in the courts and allow them to process other types of matters more speedily. However, this program does not apply to matters involving legal persons. Enterprises (as well as individuals) who run afoul of penal justice currently cannot avail themselves of the opportunity to avoid judicial proceedings. In the wake of the Jordan case1, would it not be time to implement such a measure for enterprises? In this case, the Supreme Court of Canada reminded all participants in the criminal justice system that they had to make efforts and coordinate in order to make additional structural and procedural changes. The highest court of Canada ordered a stay of the proceedings against Mr. Jordan since he had had to wait for 49 months (between the charges being laid and him being found guilty) to know the outcome of his case. The Supreme Court created a new analysis framework to determine what is a reasonable period of time for undergoing trial within the meaning of section 11(b) of the Canadian Charter of Rights and Freedoms. According the Court, changes must be made. Accordingly, it is highly important for the judicial system to make substantial efficiency gains. In the light of these teachings, it seems to us that public authorities must now consider the implementation of alternative measures for enterprises. Moreover, concerning the advisability of instituting proceedings, it is important to note that DPCP directive ACC-3 currently requires the prosecutor to consider the existence of an alternative solution. Therefore, to the current requirement that prosecutors consider the application of the diversion program in the case of natural persons who committed criminal offences, should be added that of considering the application of a similar program to legal persons. The very efficiency of our judicial system, which, like any other public institution, has limited financial resources, is at stake. Why wait? R c. Jordan 2016 CSC 27 08-07-16.

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